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| EmergingMarketsNOW |
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| Wednesday, May 14, 2008 |
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HP Announces $13.9-Bn Acquisition of EDS
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HP has entered into a definitive agreement to acquire EDS for USD 13.9 billion. As per the agreement, EDS shareholders will receive USD 25 for each share of the company. The transaction is subject to customary closing conditions; it is expected to conclude in 2H 2008. Post-acquisition, revenues from HP’s computer services are expected to increase from 16 percent to 30 percent of the total revenues.
The acquisition will assist HP to strengthen its position in India’s outsourcing services business. With this, it will be difficult for Indian IT companies to win big contracts as the top three global IT companies (IBM, Accenture, and HP-EDS) will acquire the bigger deals.
Post-acquisition, EDS will operate as a separate entity and will be renamed as EDS – an HP company, which will be based at its existing headquarters in Plano, Texas. In addition, Ronald A Rittenmeyer (Chairman, President, and CEO of EDS) will manage the combined technology services operations of HP as well as will join HP's Executive Council; he will directly report to Mark Hurd, the Chairman and CEO of HP. Further, HP is expected to lay-off a significant number of jobs.
Through the acquisition, HP aims to strengthen its IT outsourcing services operations as the combined entity will provide data center services, workplace services, networking services, managed security as well as BPO, applications, consulting and integration, and technology services. In addition, the transaction will allow the company to serve clients in the government and manufacturing sectors.
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Carlyle Group, LongReach Group Plan to Acquire Stake in Chinfon Commercial Bank
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Carlyle Group and LongReach Group are considering acquiring stakes in Taiwan Chinfon Commercial Bank; the three parties are reportedly in negotiations.
LongReach Group Limited is a Sydney-based provider of integrated information and communications technology-based products and services to the defence, security, and intelligence sectors as well as to locally and international governments, and telecommunications and corporate customers.
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Blackstone Launches Asia-Focused Hedge Fund
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The Blackstone Group has launched a hedge fund JV with Hong Kong-based fund manager Altius to focus on the Asia-Pacific region. The company—Blackstone Altius Advisors—will focus on an event-driven strategy encompassing public and private investments on an opportunistic basis.
The firm has appointed Aaron Nieman to lead operation; he will be based in Hong Kong while other team members will operate from New York and Tokyo. It will primarily target deals in Greater China, followed by regions including Japan, Korea, Australia, and the Association of Southeast Asian Nations.
Currently, Blackstone manages about USD 37 billion in hedge fund assets, including proprietary funds trading equity, debt, and other securities as well as hedge fund of funds.
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| Private Equity and M&A Activity |
Celtro Receives $20Mn from Rho Ventures; Existing Investors also Participate
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Israel-based Celtro received USD 20 million from Rho Ventures. Existing VC investors Genesis Partners and Cedar Fund also participated in the round. Celtro will invest the proceeds for expanding international operations and foraying into new markets. Ben Terk, a Partner at Rho Ventures, will be joining the Celtro Board of Directors.
Celtro provides creative mobile backhaul switching solutions that improve service delivery, increase network efficiency, and facilitate smooth backhaul network evolution. These help providers enhance revenues, improve customer satisfaction, lower operational costs, and optimize backhaul network assets.
Since its establishment in 1981, Rho Ventures (a division of Rho Capital Partners) invests in emerging and high-growth companies primarily in the US. The company’s VC and growth equity funds under management currently exceeds USD 1.7 billion.
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German Bank Invests $150Mn in Trikona Projects
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SachsenFonds (SF), a German investment bank, has acquired stakes in four realty projects of Trikona Trinity Capital, an India-focused realty fund, for USD 150 million.
In Delhi-based Uppal IT park, SF has raised its stake from 8 to 33 percent. In Hyderabad-based residential and retail project Manjira, SF acquired 41 percent, gaining ownership of the project. In the MK Mall being developed by DB Realty in Mumbai, SF acquired 40 percent shares to increase its holding to 100 percent. SF also acquired a 15 percent stake in Delhi's Luxor Cybercity, owned by Trikona.
In another deal, Trikona and SF acquired a 49 percent stake in a redevelopment project in Bandra, Mumbai. Both the parties will contribute funds in the ratio of 55:45.
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DCG Sells Stake in Egyptian Fertilizers Company
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Dubai Capital Group (DCG), the regional asset management arm of Dubai Group, has sold 15 percent of its stake in Egyptian Fertilizers Company (EFC) to Egyptian group Orascom Construction & Industries (OCI).
With this, DCG has realised an internal rate of return of 105 percent. DCG is a leading institution in the MENA region with capital above USD 1 billion.
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CEIBS Business Review Receives $5Mn VC Investment from CV
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China Europe International Business School (CEIBS) officially launched its business journal—CEIBS Business Review—with assistance from a USD 5-million VC fund from Chengwei Venture (CV). Investors include Yale University, Stanford University, and Princeton University's Education Fund.
Founded in 2000 and headquartered in Shanghai, CV is a venture fund providing services across industries.
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FEHG, YDG Invests in Chinese Credit Market
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Far East Holding Group (FEHG) and Yijiehongtai Development Group (YDG) have invested USD 0.7 million each in Xinwang Credit Management Company (XCM) to seek business opportunities in the credit market of China. FEHG and YDG will each hold 7.14 percent stakes in XCM. XCM will begin its operation from June 8, 2008, making it the largest credit information data and service center in China.
Established in 1990 and based in Yixing, FEHG is private joint-stock group providing management consultancy and investment services.
Founded in 2001, YDG is a Weifang-based firm offering services including investment, international trade, electrical and mechanical equipment maintenance, engineering and technical consulting, materials leasing, and general contracting services.
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| Offshoring and Outsourcing News |
HP Announces $13.9-Bn Acquisition of EDS
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HP has entered into a definitive agreement to acquire EDS for USD 13.9 billion. As per the agreement, EDS shareholders will receive USD 25 for each share of the company. The transaction is subject to customary closing conditions; it is expected to conclude in 2H 2008. Post-acquisition, revenues from HP’s computer services are expected to increase from 16 percent to 30 percent of the total revenues.
The acquisition will assist HP to strengthen its position in India’s outsourcing services business. With this, it will be difficult for Indian IT companies to win big contracts as the top three global IT companies (IBM, Accenture, and HP-EDS) will acquire the bigger deals.
Post-acquisition, EDS will operate as a separate entity and will be renamed as EDS – an HP company, which will be based at its existing headquarters in Plano, Texas. In addition, Ronald A Rittenmeyer (Chairman, President, and CEO of EDS) will manage the combined technology services operations of HP as well as will join HP's Executive Council; he will directly report to Mark Hurd, the Chairman and CEO of HP. Further, HP is expected to lay-off a significant number of jobs.
Through the acquisition, HP aims to strengthen its IT outsourcing services operations as the combined entity will provide data center services, workplace services, networking services, managed security as well as BPO, applications, consulting and integration, and technology services. In addition, the transaction will allow the company to serve clients in the government and manufacturing sectors.
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VC Firms Spent $87Mn in IT Sector during January-March ’08 – Venture Intelligence Service
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According to a latest report published by Venture Intelligence Service, the IT and ITeS industry has emerged as a preferred domain for VC investments during 1Q 2008. Of the USD 144 million invested in 21 deals by VC firms during the quarter, about USD 87 million was spent in 14 deals in the IT sector. About 62 percent investments were made in growth-stage companies.
The maximum investment of USD 18.5 million was made in Cleartrip.com, an Indian online travel portal, by DAG ventures. Other investments in the sector include New Enterprise Association’s USD 15-million investment in Deeya Energy; D E Shaw’s USD 15-million investment in Soham Renewable Energy; and about USD 8 million invested by India Equity partners in Ikya Human Capital.
Arun Natarajan, CEO, Venture Intelligence Service, stated that 10 of the 21 deals made during the quarter were in the range of USD 5–10 million. In addition, 75 percent investments were made in online services companies including travel, classifieds, e-commerce, e-cards as well as educations institutes.
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Patni Eyeing $50Mn IT Contract from Indian Telecom Company
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Patni Computer Systems, an Indian IT services provider to telecom companies, is in advance discussions to receive a USD 50-million IT contract from a leading telecom service provider in India. The duration and name of the client were not disclosed. The contract entails Patni to deliver Telecom-in-a-box, a service framework that allows telecom providers to easily offer services including multimedia content and IPTV to subscribers.
In recent times, Indian telecom companies (such as Idea Cellular, Vodafone, and Bharti Airtel) have outsourced technology requirements including network management, bandwidth management, and IT infrastructure management. In line with this trend, Patni aims to increase its Asia Pacific revenues from 5 percent to 9 percent by FY 2009–10. The company is also seeking to expand operations in Japan.
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Bluegarden Awards 5-Yr Outsourcing Contract to EDB
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EDB Business Partner (a Norwegian IT services provider) has entered into a mutual outsourcing contract with Bluegarden (a Norwegian HR solutions and payroll services provider). As per the five-year, USD 23-million contract, EDB will be responsible for offering IT operating services including EDB's office support platform, EDB Skala, to about 200 Bluegarden employees at four Norwegian locations. In addition, EDB will run over 20 IT applications and service desk/user support for Bluegarden employees. Moreover, EDB will operate a service desk for Bluegarden's clients when its own service desk is closed.
According to another five-year, USD 8-million contract, Bluegarden will deliver payroll processing services to EDB in Norway. In addition, Bluegarden will implement WebWorld (a Web-based personnel portal) along with providing HR outsourcing services. Moreover, the contract also has an option to provide these payroll services to other EDB companies.
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Achievo Signs Consulting Contracts with Nycomed, State of Baden-Wuerttemberg
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Achievo, a US-based software outsourcing and IT services provider, has signed two consulting contracts with the State of Baden-Wuerttemberg (Germany) and Nycomed, a Switzerland-headquartered pharmaceutical company. The duration and financial terms of the contracts were not disclosed.
The first contract entails Achievo to deliver consulting services on a range of software architectures for the existing Document Management System (DMS) of the Baden-Wuerttemberg Ministry of Finance, Germany. Achievo employees in Boblingen, Germany, will access the company’s worldwide technical experts and resources.
As per the second contract, Achievo will be responsible for providing the design, operation, and maintenance of Nycomed’s validation management process for implementing a drug safety solution.
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